Can McCain starve the supply-side beast?

What's it going to be: Tax cuts to raise revenue, or lower revenue to force spending cuts?

By Andrew Leonard
Published March 28, 2008 3:40PM (EDT)

So many Harvard economists are now blogging that it has become almost a full-time job to keep up with their daily musings, much less the torrent of research papers authored by that august institution's horde of Ph.D.s. But one of the newer arrivals, Jeff Frankel, Harvard's "James W. Harpel Professor of Capital Formation and Growth," contributed a nicely provocative post on Thursday that manages to simultaneously tackle two classic Republican shibboleths -- the myth that tax cuts raise government revenue, and the "starve-the-beast" thesis that by depriving the government of revenue you can make it smaller.

Almost no reputable economists support the discredited supply-side "Laffer curve" hypothesis that tax cuts result in increased revenue, which leads Frankel to express dismay at the news that Arthur Laffer is an economic adviser to the McCain campaign. But Frankel goes on to notice a contradiction between the supply side and starve-the-beast ideologies:

If this [starve-the-beast] proposition were true, and the supply side hypothesis were also true, it would lead to the nonsensical proposition that Republican presidents should raise tax rates in order to reduce tax revenue (Laffer) and thereby reduce government spending (starve the beast). I challenge some candidate to run on that platform!

That would be fun.

Following that point, Frankel then proves himself capable of a level of snark that earns him gold-plated membership in the blogosphere.

If McCain proposes extending the Bush tax cuts, he should at least be forced to choose between the Lafferite defense, which tends to be driven more by political expediency, and the "starve the beast" defense, which has more support among reputable Republican economists. Only then can the rest of us know which of the two propositions to refute.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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